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Bill

HB 1968

TO REQUIRE THE COLLECTION OF SALES TAX AT THE POINT OF SALE FOR THE SALE OF A NEW OR USED MOTOR VEHICLE, TRAILER, OR SEMITRAILER BY A DEALER; AND TO AMEND LAW AFFIRMED BY REFERRED ACT 19 OF 1958.

2025 Regular Session Introduced by Keith Brooks and 5 co-sponsors

House Bill 1968 requires Arkansas dealers to collect sales tax on motor vehicle sales at the point of sale, simplifying the process for consumers and enhancing efficiency.

Recommended for study in the Interim by the Committee on REVENUE & TAXATION- HOUSE
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Bill Summary · HB 1968

Summary of House Bill 1968

Purpose and Intent

House Bill 1968 (HB 1968) aims to amend existing laws regarding the collection of sales tax on the sale of new and used motor vehicles, trailers, and semitrailers in Arkansas. The primary intent of the bill is to require that sales tax be collected at the point of sale by dealers, rather than at the time of vehicle registration, thereby streamlining the tax collection process.

Key Provisions

The bill introduces several significant changes to the current tax collection framework:

  1. Point of Sale Tax Collection:

    • Sales tax on new and used motor vehicles, trailers, and semitrailers sold by dealers will be collected at the time of sale (Section 2).
    • This shifts the responsibility from the consumer paying the tax at registration to the dealer collecting it at the point of sale.

  2. Amendments to Existing Laws:

    • The bill amends Arkansas Code § 14-164-333 and § 26-52-510, which govern local sales and use taxes and the payment of sales tax on vehicle sales, respectively.
    • It clarifies that taxes must be paid directly to the Secretary of the Department of Finance and Administration at the time of sale (Section 1 and Section 2).

  3. Tax Deductions for Trade-Ins:

    • If a consumer sells a used vehicle (not traded in) and subsequently purchases a new or used vehicle within 60 days, they may pay tax on the net difference between the sale price of the new vehicle and the amount received from the sale of the used vehicle (Section 3).
    • Specific documentation, such as a bill of sale, is required to claim this deduction (Section 3).

  4. Rebate Claims:

    • The bill outlines procedures for claiming rebates on local sales and use taxes related to vehicle purchases, depending on whether the tax was collected directly or at the point of sale (Sections 5, 6, and 7).

Affected Parties

  • Dealers: Required to collect sales tax at the point of sale, which may affect their sales processes and cash flow.
  • Consumers: Will experience a change in how and when they pay sales tax on vehicle purchases, potentially simplifying the process.
  • State Revenue: The bill may impact state revenue collection processes and timelines.

Procedural Aspects

  • Introduced: April 1, 2025
  • Status: The bill was recommended for study in the Interim by the Committee on Revenue & Taxation on April 15, 2025, after being withdrawn by the author on the same day.
  • Amendments: An amendment was adopted on April 8, 2025, adding Senator M. Johnson as a cosponsor.

Conclusion

HB 1968 seeks to modernize the sales tax collection process for motor vehicle transactions in Arkansas by requiring dealers to collect taxes at the point of sale. This change aims to enhance efficiency in tax collection and provide clarity for consumers and dealers alike. Further study and discussion will determine the bill's future and potential implementation.

Compiled from official sources — confirm details with the bill’s official record.

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